Legislation underpinning the solicitor-client costs regime should be completely overhauled to take disputes out of the courts, a working group of the Civil Justice Council has recommended. Part III of the Solicitors Act 1974 should be replaced with a statutory code working alongside professional conduct rules overseen by regulators, the group recommended in a consultation published yesterday.
Fee-related disputes for modest bills should be settled through the legal ombudsman scheme, with solicitors subject to an overarching principle that charges should be ‘fair and reasonable’. Such a test, which would require guidance on definitions, would replace the concept of ‘informed consent’ and remove the existing distinction between contentious and non-contentious business.
For larger matters falling outside the ombudsman’s remit, or where the bill is more than £50,000, recourse to the courts would be preceded by mandatory alternative dispute resolution.
Mr Justice Adam Johnson, the working group’s chair, said the current regime for challenging legal costs is ‘complex, formalistic and outmoded’ and provides ‘perverse incentives’ for costly litigation.
‘The world has moved on since 1974,’ said the group. Court disputes about costs assessment have become commonplace, as parties argue on the extent of informed consent given by clients. The case of Belsner highlighted a central issue, where the charges were held to be fair and reasonable, even though the solicitors had not complied with SRA rules to ensure clients received the best possible information. ‘This is a serious area of legal uncertainty,’ said the group.
Charging structures have also become more complex, with solicitors more likely to render interim bills during the course of a case, while there is more emphasis on settling potential claims before the issue of a claim form.
The Solicitors Act makes a distinction between non-contentious business – which includes work done unless and until proceedings are begun – and contentious business. Work such as pre-action correspondence and engaging in pre-action portals is classed as non-contentious, but if proceedings begin, the whole retainer becomes contentious work and the costs more likely to be recoverable from an opponent.
Clients and solicitors can enter a contentious business arrangement as long as they agree in writing.
The working group said the distinction between contentious and non-contentious ‘has no modern relevance’ and its continued presence ‘leads to unnecessary complication and uncertainty’.
The group also recommends abolition of the terms ‘statute’ and ‘statutory’ to describe a bill. Formal requirements for signature and delivery of a bill as prescribed by the act were also found to be outmoded, including the rule that clients indicate a willingness to accept delivery by email.
A consultation on the proposals runs until 16 July and a final report is expected early next year.
